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with this policy.

III. Scope

This policy applies to all public funds in the custody of the City that are not required
by law to be deposited in the state treasury and that the City has authority to invest.
These funds are reported in the City's Annual Comprehensive Financial Report
(ACFR).

Funds held by trustees or retirement funds are excluded from this policy; however,
all funds are subject to regulations established by the State of Texas. These excluded
funds may also be reported in the City's Annual Comprehensive Financial Report
(ACFR) based upon standards promulgated by the Governmental Accounting
Standards Board (GASB).

IV. Objectives

The City shall manage and invest its assets with the following four major
objectives, listed in order of priority:

1. Safety

Consistent with the requirements of the Act, safety of principal is the
foremost objective of the City's investment program. All aspects of cash
and investment management operations shall be designed to ensure the
safety and integrity of the City's financial assets. Investments shall be
undertaken in a manner that seeks to ensure the preservation of principal
in the overall portfolios, mitigating credit and interest rate risk. Each
investment transaction shall be conducted in a manner to minimize
principal losses. All cash and investment management activities shall be done
in a manner that promotes and is reflective of public trust.

2. Liquidity

The investment portfolios shall be structured to timely meet expected
cash flow needs and associated obligations in a manner that results in the
lowest cost to the City. This objective shall be achieved by matching
investment maturities with forecasted cash outflows and maintaining an
additional liquidity buffer for unexpected liabilities.

3. Diversification

The portfolios shall be diversified by market sector and maturity in order to

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